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Welcome back. We have another piece dropping tmrw, but I think this is going to be an extremely interesting piece on non-AI companies.

There’s an argument out there recently that capital is going to 1) everything tied to the massive AI buildout and then, later on, 2) anything that has some semblance of durability, aka “assets with qualities that cannot be replicated by technology”. For Thrive Capital’s Josh Kushner, this is mainly meant to be about sports teams, but Jon Gray at Blackstone was someone who argued that real estate is something that’s going to eventually recover. There’s naturally some book talking there, but the right real estate obviously has real staying power, it’s just a question of when certain markets recover and what industries and geographies look better than others.

Point being though, there’s going to be a bunch of real world assets that will stand the test of AI and survive & thrive due to being instituted with cultural importance that will withstand time. Some of these assets already have a high bid (sports) while others are being neglected over the short-term, but deserve the love long-term.

Before we get into it, we launched a community for finance professionals that you can join in like 5 seconds here. This is a great forum to connect with other finance professionals.

Also, I decided to extend out our discounted HYH Premium introductory offer for another 72 hours. This grants you full access to our restructuring, credit recruiting, and investment banking recruiting materials at a material discount.

After I started writing this, a Vinod Kholsa led group acquired the Seattle Seahawks for over $9.6 Billion. Compared to the $6B purchase price of the Washington Commanders, and the $4.65B buyout of the Denver Broncos, clearly, the price of brick is going up.

Some massive sports empires are already being formed. As you can see below, Kroenke is among the massive sports empires that already exist (they also own Arsenal).

With sports valuations rocketing higher, and only oh so many mega-rich families out there, institutional capital has started to get into your favorite sports teams.

There’s a reason KKR bought Arctos Partners for $1.4B (plus an additional $550mm of future equity vesting through 2033) back in January 2026. Arctos was founded back in 2019 to acquire minority stakes in franchises - building stakes in the Buffalo Bills, LA Chargers, Golden State Warriors, several MLB teams, and clubs like Liverpool and PSG. Arctos has $15B of AUM and is focused on raising fund III.

Slowly, institutional capital is realizing that sports are among the businesses that have material staying power.

The clear-cut example here is Josh Kushner and Thrive Capital announcing “Thrive Eternal” and then immediately buying a stake in the San Francisco Giants.

The thesis behind this permanent capital holding company is to make decade-long investments in companies that cannot be replicated by technology - brands that are iconic and have lasting relationships with consumers. Naturally, this ended up being a sports team people love.

Sports teams are lifelong connections for many of us. Where we have a deep-rooted connection with our childhood team, local team, or favorite players.

This seems like skating to where the puck is going before ppl cycle capital out of commoditized industries into “assets with qualities that cannot be replicated by technology”

Josh Kushner's Thrive Eternal is also in talks to bid for an NBA expansion team in Las Vegas, so he’s definitely staying busy with the strategy.

And it seems like future sports financing capital is almost certainly going to have to be institutional because the threshold to buy a meaningful stake in a team keeps getting higher and higher. That’s why we have teams owned by Johnson & Johnson nepos, or Walmart nepos.

Following the World Cup too, there’s a renewed focus on both Soccer domestically and globally. You’d be surprised at MLS team valuations.

But what also makes some of these U.S. soccer teams quite valuable, despite worse play compared to Europe, is that the stadiums are multi-purpose and can host other sporting events as well as concerts. LAFC’s BMO Stadium seems to be quite the venue, for example.

The American fear of relegation is another driver that creates a scarcity element with professional sports teams. But that’s also a value creator abroad.

Promotion/Relegation and climbing up the table is a nice way to dramatically increase the value of your team as the revenue opportunity becomes more lucrative. Wrexham is the example everyone gravitates to. They nearly made the playoffs for promotion this past season, with Hull City getting the 3rd promotion spot with Coventry and Ipswich. I would view Wrexham (as well as recently relegated West Ham) to be among the favorites for promotion in the ‘26-’27 season.

The other example is Como. Much of Wall Street knows of Lake Como as a spot outside of Milan to vacation in, but the club has been able to climb up the ladder. They have billionaire backing which have helped redevelop the stadium and sign new players, with the club cleverly buying a bunch of younger, high-potential players to build out the roster. The roster construction has irked Italian football though given the lack of Italians on the team. But Serie A isn’t necessarily what it used to be, and Italy doesn’t have the same star power it used to have.

The problem with trying to build up a club’s valuation in a promotion/relegation setting is that with too much leverage, flailing performance, or overpaying for players without an ability to recoup spend via the right player sales, things can spiral quickly.

A big trend in English football has involved “financial fair play” which is designed so firms aren’t recklessly spending and taking on unsustainable debt. This means clubs are restricted to a maximum net loss of 60mm euros over a 3-year basis, with owners having to cover the difference with equity. The EPL threshold is 105mm over 3-years.

What looked like a way to keep big clubs like Man City and Chelsea in check, ended up being something that was more so a way to target mid-table clubs like Everton. Basically what happened with Everton is they overpaid for a bunch of mediocre players in the late 2010s. Players like Gylfi Sigurdsson, Yannick Bolasie, Davy Klaassen, Morgan Schneiderlin, Theo Walcott, and Ashley Williams. These players weren’t good enough to make the club better, and their talent depreciated quite quickly. Suddenly, Everton lacked the ability to actually sell these players at a profit, or to recoup even a respectable amount for them. Many of these players walked away for free. These overpays led to the club being charged with monetary fines as well as point deductions. Nottingham Forest was also on the receiving end of point deductions.

Man City can do whatever because they’re too big to fail or be punished, but other clubs can be made examples of. That’s why it’s important for many of these clubs to not run technically afoul and make sure they’re selling as much as they’re buying.

Some clubs are now wrestling with having to conduct player sales before being able to buy new players. A team wrestling with this now is Newcastle United which sold Anthony Gordon to FC Barcelona for an outrageous fee, and sold Italian CM Sandro Tonali to Tottenham. While Tottenham was on the brink of relegation last year, their incredible stadium and large and premium fanbase, are among the reasons they’re so cash rich and can recruit expensive players despite flirting with relegation the past two years.

Earlier this year, the Saudi PIF outlined a plan to focus more on soccer being the centerpiece of its sports buildout; with less focus on golf, winter events, and non-core teams. Given the instability in the region, some of these broader tourism projects are certainly secondary relative to general security and the ability to transport goods.

There was some talk as well about the PIF doing a minority stake sale of Newcastle United, I’m a little surprised it’s not an outright sale given the sudden decision to stop funding LIV, but the club is in the middle of trying to figure out whether to renovate St. James Park or build a new stadium.

It seems like Golf isn’t worth the squeeze, but soccer is still getting bankrolled due to the potential to compete at the global scale and the 2034 World Cup hosted by Saudi Arabia. There’s a lot of oil money, but whether that money will gravitate towards sports over the long-term is another question.

The worrying part as sports fans is that we have a captive love with teams where prices just continue getting juiced higher by firms continuously looking for ways to monetize. There are more sponsors on jerseys than there used to be, tickets are higher, beer prices are higher, jerseys and merch are higher, and there always seems to be new ways for your wallet to be stretched.

At the end of the day, all of these companies are trying to generate a return on their investment, and higher prices and more events are the obvious levers to pull.

There’s also the element where you’re constantly bombarded with sports betting. I am pro sportsbooks and prediction markets, but I get people’s hesitations about constant integration.

Ultimately, AI’s disruption towards software and knowledge-based business is driving capital towards businesses like sports teams, and I don’t expect this trend to let up in relegation-insulated markets like the U.S.

But what else is there that fits that Thrive Eternal investment bucket? Let’s get into it below:

1) Live entertainment venues:

This plays into sports a little bit given these stadiums are moving towards being able to host concerts as well. But this can include any of the following:

Sport arenas obviously have multi-sport capabilities, and room for concerts, trade shows, comedy shows, and other live events. As long as traffic is good for these events and there are good demographics in these locations, then there’s a lot to be excited about for these types of assets. There’s definitely an “IRL” and “Community” type of investment thesis here even though things have moved more online and people stay at home/spend money at home.

2) Music catalogs

Ah, the Scooter Braun playbook. How this is the love of Sydney Sweeney’s life is a question for another time. Music can withstand the test of time (I write this with some Radiohead on in the background) so great music has long staying power.

Investment firms have been buying the music rights for quite some time, with Queen, Bruce Springsteen, Bob Dylan, Pink Floyd, Justin Bieber, Neil Young, and John Legend among those who have transacted.

The most relevant negative case to bring up is Taylor Swift re-recording top songs as “Taylor’s Version” because she was mad that Scooter Braun’s company bought her old record label. But outside of that, a lot of these music deals seem to work well for both parties.

I wonder how this will evolve given a lot of the music today is now more optimized for TikTok or social media virality. The staying power and legacy of newer artists feels like it’s going to wither away, but maybe I’m biased in terms of thinking the music I grew up on in the late 2000s/early 2010s was the peak. Despite having mega concerts and a lot of Spotify streams, I think the music of a Sabrina Carpenter or Tate McRae lacks staying power and substance relative to what, for example, Taylor Swift has written. Legacy musicians who can withstand trends will continue receiving a healthy cut of profits for their music.

Ultimately, this type of investment flows into concerts and cultural relevance that withstands time.

3) Celebrity IP

This might actually fall out of the traditional bucket, as its not IRL, and but it does have a level of cultural relevance.

Authentic Brands has really zoned in on this. Authentic Brands is an asset-light business model where they buy the IP of the “iconic”, usually distressed brands, and earns licensing royalties, minimum royalties, marketing, and other semi recurring fees. On the celebrity IP side, this includes Shaq, David Beckham, and Kevin Hart on the celebrity IP side, but the portfolio is quite vast and includes stakes in the following: Rebok, Champion, Eddie Bauer, Aeropostale, Nine West, Dockers, Brooks Brothers, IZod, Forever21, Sports Illustrated, Saks Fifth Avenue, Neiman Marcus, and many more.

Obviously, these are distressed retail assets they’re picking up for pennies on the dollar (we’ve written about it with Forever 21 and Saks pieces) but some of these celebrities crash and burn too - with Kevin Hart in particular biting off more than he could chew in this Bloomberg deep dive.

4) Luxury brands:

This can include the high-end luxury brands, I mean, look at how rich Bernard Arnault is. High-end luxury has been consolidating due to competition and slowdown in some Asian markets. Gucci sales in particular were down -8% in 1Q. There are clearly ebbs and flows, but a lot of money to be made if you nail selling to the high-end consumer. But I think this might also appeal to some of the brands people love beyond just high-end clothes: This means the Guinness, the high-end liquor and other prestigious alcohol. Not the alcohol that’s a fad, but the iconic brands that are high quality.

This is the area where I’m open to the most pushback. Because some of these luxury car companies and premium alcoholic beverage companies have been struggling as of late. So it’s really a more bifurcated game to play. You have to make sure you survive trends and changes in fashion and taste. But if you nail an emerging brand or are able to renavigate a legacy brand, then there’s attractive investment cases to me.

5) Destination properties:

This flows into 1) re: live entertainment assets, but I’d say this focuses on destination assets, historic hotels, private clubs and golf courses, resorts, high-end restaurants with strong staying power, ski resorts (starting to blow up in Vail’s faces though). Montauk, for example, has a very captive, high-earning audience and a finite amount of resources.

In this bucket, I’d say that if I’m able to get own a high-end vacation property, then this might have a level of durability that will persist time and AI. I think that’s part of the Disney thesis, although I’m not a fan of the story there given the unconvincing performance and returns. But ultimately “Disney World” is one of those iconic properties.

I think if you own a high-end property in an area that people love going to, then there’s some level of insulation. It flows back to what I was talking about with the luxury brands trends - own something that rich people like spending money on. Just don’t accidentally cook the golden goose by making strategic missteps.

6) Other:

Some of the other items that came up when diligencing have some sort of religious or spiritual element….but man, imagine how mad people would be if private equity interjected themselves into those types of “assets”…..some things are bigger than money.

While religious and historically-adjacent institutions have that “cultural institutions rooted in tradition, identity, and shared experience” - I don’t think these are things that should necessarily be viewed as “assets”. Imagine a Church becoming an asset. But hey, with the Righteous Gemstones parodies, who knows.

I’d say other Real Estate we haven’t quite talked about yet hits this bucket too. Some Offices will be more attractive than other geographies, hotels might stink in some cities vs. others, and, at the moment, data centers are clearly seeing massive prioritization over other types of real estate investments. But prime real estate in a certain part of town might have material value.

Concluding remarks: Like I said earlier, people cycling capital out of commoditized industries into “assets with qualities that cannot be replicated by technology” feels inevitable.

This change in capital allocation has already started but will probably continue from here - many of the software and tech-enabled services deals that powered the 2010s are going to need to chase other types of business. Hard asset and realworld businesses are where that $$ will probably flow to.

Until next time.

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